Supports for rupiah remain unclear<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
The much-awaited government policy changes on Wednesday to help
\nsolidify the rupiah turned out to be somewhat of an anticlimax as
\nPresident Susilo Bambang Yudhoyono announced that the government
\nwould wait \"until after October\" to hike domestic fuel prices.<\/p>\n
In a televised speech, Susilo said the government would raise
\nfuel prices only after the completion of its September-October
\nregistration of the poor in the country, who are eligible for
\nreceiving assistance funds to offset possible economic impacts
\nfrom the hike.<\/p>\n
\"The government has finally decided that, whatever happens, we
\nmust raise fuel prices while at the same time cutting fuel
\nsubsidies,\" he said. \"The subsidies will be gradually reduced and
\nI want to make sure that the assistance funds reach the intended
\nrecipients, be they through bank transfers, reimbursements or
\nhard cash.\"<\/p>\n
The rupiah closed up to Rp 10,250 per dollar on Wednesday,
\naccording to Bloomberg, up 2.6 percent from Rp 10,525 close on
\nthe previous day.<\/p>\n
The rupiah was rescued from a 10-day plunge on Tuesday as the
\ncentral bank tightened policies to support the currency,
\nincluding an ample hike of its benchmark BI Rate to 9.5 percent
\nand an increase in the minimum reserve that banks must maintain.<\/p>\n
The rupiah's slide to a four-year low has been attributed to
\nsoaring oil prices, making Indonesia's oil imports and fuel
\nsubsidies that much more costly and burdening the state budget.
\nAnalysts far and wide have intensified their calls for the
\ngovernment to immediately increase domestic fuel prices and cut
\nthe subsidy.<\/p>\n
Susilo said he understood the criticism over the government's
\noil price assumption for next year's budget, which stands at
\nUS$40 a barrel while oil prices are currently at $70 a barrel.<\/p>\n
\"I personally think that $55 is more realistic,\" he said.<\/p>\n
Susilo also said the government would speed up the contract
\ntalks for an oil refinery in Central Java's Cepu field, the
\nconstruction of an oil refinery in Jeruk, East Java -- which will
\nboost oil output to 1.3 million barrels per day -- as well as the
\ngas refinery in Tangguh, Papua.<\/p>\n
The government will do its utmost to combat fuel smuggling, of
\nwhich some of the cases, Susilo said, involved officials from
\nstate oil and gas firm PT Pertamina.<\/p>\n
Shortly before the announcement, Indonesian Chamber of
\nCommerce and Industry (Kadin) chairman Mohamad S. Hidayat said
\n\"there were voices during the Cabinet meeting on Tuesday night
\nsuggesting a reduction in the fuel subsidy starting in
\nSeptember.\"<\/p>\n
\"But the President eventually decided to start reducing it in
\nNovember, as he wants to wait for the result of the survey on the
\ncountry's poor,\" he said.<\/p>\n
Standard Chartered economist Fauzi Ichsan said the President's
\nannouncement would be inadequate without further follow-ups.<\/p>\n
\"Although the announcement shows that the government has
\nrealized fuel subsidies are the root of the problem, it still
\nneeds to provide a more detailed action plan,\" he said.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/supports-for-rupiah-remain-unclear-1447893297",
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"sponsor": "Okusi Associates",
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